CoPS/IMPACT Working Paper Number G-273

Title: An Application of the Integrated Economic-Environmental Modelling Framework to
Guatemala's Forest and Fuelwood Sector

Authors: Onil Banerjee, Martin Cicowiez, Renato Vargas, Mark Horridge

Abstract

This paper develops and operationalizes the Integrated Economic-Environmental
Modelling (IEEM) platform which integrates environmental data organized under the first
international standard for environmental-economic accounting with a powerful economy-wide
modelling approach. IEEM enables the ex-ante economic analysis of public policies and
investment on the economy and the environment in a quantitative, comprehensive and
consistent framework. IEEM elucidates the two-way interrelationships between the economy
and environment, considering how economic activities depend on the environment as a
source of inputs and as a sink for its outputs. In addition to standard economic impact
indicators such as gross domestic product, income and employment, IEEM generates
indicators that describe policy impacts on the use of environmental resources, wealth and
environmental quality which together determine prospects for future economic growth and
well-being. To illustrate the analytical capacity of IEEM, the model is calibrated with
Guatemala's environmental-economic accounts and applied to analysis of its forest and
fuelwood sector where negative health and environmental impacts arise from inefficient
household fuelwood use.